Hannigan v. Goldfarb

• Decision Date: 16 December 1958
• Docket Number: No. A--300,A--300
• Citation: 53 N.J.Super. 190,147 A.2d 56
• Parties: Margaret Alice HANNIGAN, Petitioner-Appellant, v. David GOLDFARB, t/a 20th Century Cab, Respondent-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 190

53 N.J.Super. 190

147 A.2d 56

Margaret Alice HANNIGAN, Petitioner-Appellant, v. David GOLDFARB, t/a 20th Century Cab, Respondent-Respondent.

No. A--300.

Superior Court of New Jersey

Appellate Division.

Argued Sept. 29, 1958.

Decided Dec. 16, 1958.

Ferdinand Biunno, Newark, argued the cause for appellant (Sanford Silver, Newark, on the brief).

Mortimer Wald, Newark, argued the cause for respondent (Simon J. Griffinger, Newark, attorney).

The opinion of the court was delivered by

GAULKIN, J.A.D.

This is a workmen's compensation case. In the Division of Workmen's Compensation petitioner was awarded compensation for the death of her son, Donald Hannigan, who was killed while driving one of respondent's taxicabs. On appeal the County Court reversed, on the ground that the decedent was not an employee of respondent. The petitioner now appeals from the judgment of the County Court.

Respondent Goldfarb owns five taxicabs and 'manages' five others belonging to his mother. Although the membership is technically in the name of his mother, for the purposes of this case we may consider him a member of the 'Twentieth Century Taxi Cab Association,' a New Jersey non-pecuniary profit corporation organized in 1938 (hereafter called the Association) about which more will be said later. Goldfarb's ten cabs were painted the same color and bore the same '20th Century Cab' insignia as the cabs of all other members of the Association.

Goldfarb insists he does not operate taxicabs, but only rents them. Petitioner admits the decedent (hereafter called Hannigan) agreed to pay Goldfarb $8 for every 12-hour shift during which he operated one of Goldfarb's cabs; that he kept all his fares and tips and did not account to Goldfarb for them; and that he paid for the gas and oil used during the time he operated the cab. (Hereafter, for brevity, we will call this the 'three-phase arrangement.') Goldfarb contends that this arrangement proves conclusively that, regardless of any other incidents of the relationship between Hannigan and Goldfarb, this was a mere rental and Hannigan was not an employee.

This appears to be a case of first impression in New Jersey. In other jurisdictions there is a split of authority on whether a driver under such an arrangement is an employee. See Annotations, 152 A.L.R. 520, 522 and 10 A.L.R.2d 369; 1 Larson, Workmen's Compensation Law, § 46.00 et seq. In some cases it has been held that the taxi driver may be the employee of the owner even under a 'three-phase arrangement.' Salt Lake Transportation Co. v. Board of Review, 5 Utah 2d 87, 296 P.2d 983 (Sup.Ct.1956); Diamond Cab Co. v. Adams, 91 Ga.App. 220, 85 S.E.2d 451 (Ct.App.1954); Redwine v. Wilkes, 83 Ga.App. 645, 64 S.E.2d 101 (Ct.App.1951); Jones v. Goodson, 121 F.2d 176 (10 Cir. 1941); Kaus v. Unemployment C.C., 230 Iowa 860, 299 N.W. 415 (Sup.Ct.1941). See also Kaus v. Huston, 35 F.Supp. 327 (D.C.N.D.Iowa 1940), affirmed on other grounds 120 F.2d 183 (8 Cir. 1941); Maher v. Commander Taxi Corp., 227 App.Div. 832, 237 N.Y.S. 831 (App.Div.1929). In other cases (sometimes in the same jurisdiction) the courts have held to the contrary. Fidelity & Casualty Co. of N.Y. v. Windham, 209 Ga. 592, 74 S.E.2d 835 (Sup.Ct.1953); Party Cab Co. v. U.S., 172 F.2d 87, 10 A.L.R.2d 358 (7 Cir. 1949), certiorari denied 338 U.S. 818, 70 S.Ct. 62, 94 L.Ed. 496 (1949); New Deal Cab Co. v. Fahs, 174 F.2d 318 (5 Cir. 1949), certiorari denied 338 U.S. 818, 70 S.Ct. 62, 94 L.Ed. 496 (1949); U.S. v. Davis, 154 F.2d 314 (D.C.Cir.1946); Magruder v. Yellow Cab Co., 141 F.2d 324, 152 A.L.R. 516 (4 Cir. 1944); Coviello v. Industrial Comm., 129 Ohio St. 589, 196 N.E. 661 (Sup.Ct.1935). See also Rockefeller v. Industrial Comm., 58 Utah 124, 197 P. 1038 (Sup.Ct.1921).

Most of the above cited cases arose not under workmen's compensation acts but under social security and unemployment compensation acts. Nonetheless, for present purposes their reasoning is apposite. Cf., De Monaco v. Renton, 18 N.J. 352, 357, 113 A.2d 782 (1955).

It is true that (as the annotation in 10 A.L.R.2d says, at p. 369), '* * it must be pointed out that varying facts account in no small measure for the contrary results reached.' One of those 'facts' is the difference in the definitions of employee contained in the particular statutes involved. An illuminating illustration of the effect of the definition in a statute is given in detail in the Party Cab Co. case, supra, at page 89 of 172 F.2d. There the court pointed out that in 1935, when the federal Social Security Act, 42 U.S.C.A. § 301 et seq., was enacted, the term 'employee' was not defined. The federal courts interpreted it broadly, beyond its strict common-law meaning, with reference to the purpose of the law to give protection to the alleged employee where the economic facts of the relationship seemed to the court to require such protection. Congress was not happy with that result, so in 1948 the law was amended, over the President's veto to expressly provide that 'employee * * * does not include any individual who, under the usual common-law rules * * * is not an employee.' (It is interesting to note that in his veto message the President said the amendment would exclude '* * * persons working as * * * taxicab drivers * * *.') Since that amendment the interpretations of 'employee' by the federal courts have tended to be upon strict common-law principles. This may account, in some measure at least, for the difference in the pre-amendment cases, such as Jones v. Goodson, supra, and the post-amendment cases. But see Larson, supra, § 43.41.

But almost equal in importance to difference in facts is the difference in the attitude of the courts of the several jurisdictions towards legislation such as the Workmen's Compensation Act. As Justice Rutledge said in N.L.R.B. v. Hearst Publications, 332 U.S. 111, 122, 64 S.Ct. 851, 856, 88 L.Ed. 1170, 1179--1180 (1943),

'It is enough to point out that, with reference to an identical problem, results may be contrary over a very considerable region of doubt in applying the distinction, depending upon the state or jurisdiction where the determination is made. * * * In short, the assumed simplicity and uniformity, resulting from application of 'common-law standards,' does not exist.'

Illustrating this, Justice Rutledge pointed out that on the same facts upon which the courts of New Jersey found there was the employer-employee relationship (Auer v. Sinclair Ref. Co., 103 N.J.L. 372, 137 A. 555, 54 A.L.R. 623 (E. & A.1926), and Schomp v. Fuller Brush Co., 124 N.J.L. 487, 12 A.2d 702 (Sup.Ct.1940), affirmed In re Schomp, 126 N.J.L. 368, 19 A.2d 780 (E. & A.1941)), courts of other jurisdictions, whose attitude toward such legislation is different than ours, held there was not. As Larson says (§ 43.10):

'It has been said that precedents may be found on both sides of almost every conceivable situation in which the question (of 'employment') could arise. The explanation of this paradox--complete agreement on principles and endless disagreement in actual decisions--seems to lie partly * * * in the extent to which courts define status in view of the purpose served by the particular legislation rather than as a fixed and static concept.'

The term 'employee' in our Workmen's Compensation Act is not limited to narrow common-law concepts for, in addition to servants, it 'includes all natural persons * * * who perform service for an employer for financial consideration.' N.J.S.A. 34:15--36. This is a broad definition which includes relationships not ordinarily considered to constitute employment. Our act is construed to bring as many cases as possible within its coverage, Parker v. Zanghi, 45 N.J.Super. 167, 171, 131 A.2d 802 (App.Div.1957); El v. Newark Star Ledger, 131 N.J.L. 373, 36 A.2d 616 (Sup.Ct.1944). Cf., De Monaco v. Renton, supra; Parks Cab Co. v. Annunzio, 412 Ill. 549, 107 N.E.2d 853, 854 (Sup.Ct.1952); Salt Lake Transportation Co. v. Bd. of Review, supra, 5 Utah 2d 87, 296 P.2d 983, at page 985. We therefore hold that in spite of such a 'three-phase arrangement,' a taxi driver may be an employee under our Workmen's Compensation Act.

Whether or not Hannigan was, in fact, an employee must be determined not upon that arrangement alone but upon the totality of the facts surrounding the relationship. The testimony of the arrangement between Hannigan and Goldfarb was oral, but even if it were written (as Goldfarb said it was, in a contract which he said he could not find) the language which the parties used in the contract would not be conclusive. 'We are not so much concerned with the formal wording * * * as we are with the factual relation * * *' when we inquire whether parties are employer and employee. El v. Newark Star Ledger, supra, 131 N.J.L. at page 379, 36 A.2d at page 619. Cf. Fenwick v. Unemployment C.C., 133 N.J.L. 295, 44 A.2d 172 (E. & A.1945); Electrolux Corp. v. Board of Review, 129 N.J.L. 154, 28 A.2d 207 (E. & A.1942); Schomp v. Fuller Brush Co., 124 N.J.L. 487, 12 A.2d 702 (Sup.Ct.1940), affirmed In re Schomp, 126 N.J.L. 368, 19 A.2d 780 (E. & A.1941). 'Regard must be had to the attendant circumstances and the object in view, and also the course of practice of the parties in its execution, since that is significant of the common purpose * * *.' Fury v. New York & Long Branch R.R. Co., 126 N.J.L. 25, 30, 16 A.2d 544, 547 (Sup.Ct.1940), affirmed 127 N.J.L. 354, 22 A.2d 286 (E. & A.1941), certiorari denied 315 U.S. 815, 62 S.Ct. 800, 86 L.Ed. 1213 (1942). Cf. Galler v. Slurzberg, 31 N.J.Super. 314, 106 A.2d 312 (App.Div.1954), affirmed o.b. 18 N.J. 466, 114 A.2d 260 (1955).

The parties here agree that whenever the employer retains the right to direct the manner in which the business shall be done, as well as the result to be accomplished, or in other words, not only what shall be done, but how it shall be done, it usually proves that the relationship of employer and employee does...